Russia may block airlines from returning hundreds of leased planes to foreign companies as it fights back against western sanctions.
The Kremlin is also planning to order carriers such as Aeroflot to pay their leases in roubles for the rest of the year, according to draft laws published today.
Airplane leasing firms are mainly based in Ireland, and around $10bn (£7.6bn) of western capital is estimated to be tied up in leases. In total there are almost 780 jets leased by Russian airlines, including 515 from foreign lessors.
Sanctions mean leasing firms must halt business in the country by March 28, but they are facing a huge logistical challenge to retrieve stranded planes.
Russia’s aviation industry has been plunged into crisis after the country was banned from most European airspace. Many airlines have scrapped international flights over fears their leased aircraft will be seized, while the UK has shut Moscow out of the London insurance market.
The proposed laws also mark efforts by authorities to stem outflows of foreign currency after sanctions froze much of the country’s foreign reserves and sparked a collapse in the rouble.
09:10 AM
YouTube and Google Pay block paid services in Russia
YouTube and the Google Play store are suspending all payment-based services in Russia, including subscriptions, in the latest challenge to the country’s economy.
Google and YouTube had recently stopped selling online advertising in Russia following similar pauses by Twitter and Snap after Moscow’s invasion of Ukraine.
In a statement, YouTube said: “As a follow-up, we’re now extending this pause to all our monetisation features, including YouTube Premium, Channel Memberships, Super Chat and Merchandise, for viewers in Russia.”
YouTube channels in Russia will still be able to generate revenue from viewers outside of Russia through ads and paid features, which include Super Chat and merchandise sales.
Free apps on Google Play also remain available in Russia, according to a company support website.
08:57 AM
Gas prices drop as Russian flows hold steady
Natural gas prices dropped as much as 10pc this morning as Russia kept flows to the continent steady despite worries that Vladimir Putin could turn off the taps.
Shipments via a key route crossing Ukraine are set to remain normal today, according to data from grid operator Eustream. Supplier Gazprom has also said flows via Ukraine are in line with client requests.
That’s reassuring markets amid concerns Moscow could cut gas supplies to Europe in retaliation against sanctions. Governments are preparing plans to wean themselves off Russian energy, but a halt in supplies would send prices even higher.
Adding to the turmoil, Ukraine’s grid operator yesterday said Russian troops had entered two of four stations that pump gas to Europe.
08:31 AM
FTSE risers and fallers
The FTSE 100 has lost ground in early trading, with sentiment dipping after yesterday’s blistering rally.
The blue-chip index fell 0.9pc, dragged down by losses for banking and mining stocks.
Rio Tinto slumped to the bottom of the index, dropping more than 6pc in ex-dividend trading after it said it was cutting all ties with Russian businesses.
HSBC lost ground, while BP and Shell both dropped after oil prices suffered their biggest one-day fall in three months amid volatile trading.
The FTSE 250 dipped 0.2pc, with Wizz Air shedding 3pc.
08:27 AM
Credit Suisse reveals £700m exposure to Russia
Credit Suisse has revealed it had 848m francs (£694m) of credit exposure to Russia at the end of last year, while it warned of higher provisions and lower deal-making as a result of the invasion.
The Swiss lender said its exposure to Russia included derivatives and financing at the investment bank, trade finance at the Swiss business and lombard and other loans within private banking.
But it said it had minimal exposure to sanctioned individuals within wealth management and that its Russia market risk exposure wasn’t significant.
Credit Suisse is the latest European bank to reassure investors it can weather the conflict in Ukraine. The bank still has an office in Moscow and is viewed as a key player in managing expat Russian wealth.
The lender said demand for trading and hedging was up, but this was offset by more fears of loans going bad – a similar dynamic to early in the pandemic.
08:12 AM
John Lewis brings back bonus after record sales
John Lewis is bringing back its staff bonus after the retailer’s profits rebounded following a tough pandemic year.
Employees at the high street stalwart will share a £46m pot, with each receiving a bonus of 3pc – or one-and-a-half week’s pay. The company also said it will increase wages by 2pc on top of its pledge to pay the real living wage.
It marks the return of payouts after John Lewis was forced to scrap last year’s bonus for the first time since 1953.
The group, which also owns Waitrose, reported underlying pre-tax profits of £181m in the year to January 29 thanks to record sales of £4.9bn – up 8pc on a like-for-like basis.
It remained in the red on a bottom-line basis, though losses narrowed sharply to £26m from £517m in 2020, when the pandemic drove the company to its first ever annual loss.
Chair Dame Sharon White hailed a “good start” to the group’s five-year overhaul, but warned of a troubled wider outlook amid inflation and a cost-of-living crisis.
John Lewis, which recently ditched its “Never Knowingly Undersold” pledge, has said it will remove any products made in Russia from its shelves.
08:04 AM
FTSE 100 falls at the open
The FTSE 100 has lost ground at the open, bringing to an end a blistering rally that saw global markets surge on Wednesday.
The blue-chip index fell 0.4pc to 7,159 points.
08:02 AM
VW boss: Fallout from war will be ‘much worse’ than pandemic
The boss of Volkswagen has warned the economic damage from the war in Ukraine will be “very much worse” than the pandemic.
Herbert Diess, chief executive of Europe’s largest car maker, said the disruption to global supply chains from the conflict “could lead to huge price increases, scarcity of energy and inflation”.
He told the Financial Times: “It could be very risky for the European and German economies.”
Tough western sanctions against Moscow, combined with fears that Vladimir Putin could retaliate by cutting off supplies, have sparked chaos across energy and commodity markets.
Economist fear this could fan inflation even higher across the continent, while also denting economic growth.
Mr Diess added:
For a society like Germany, depending on Russian energy, raw materials . . . if you imagine a scenario where we cut off business relations with Russia, which we probably would have to do if this conflict [does not end], you could not buy energy any more and this would lead to a situation that might impact Europe and Germany considerably.
07:53 AM
Rouble steadies ahead of Russia-Ukraine talks
The rouble stabilised in early Moscow trading ahead of the first talks between Russian and Ukrainian foreign ministers since the invasion began two weeks ago.
The Russian currency was trading at 120.1 against the dollar – barely changed from yesterday’s closing pric. Against the euro it was around 0.8pc weaker at 128.
The rouble has tanked since Russia pushed troops into its neighbour, sparking a wave of tough sanctions by the West. It dropped to record lows yesterday when the Moscow market reopened after a trading suspension.
Top Russian and Ukrainian diplomats Sergei Lavrov and Dmytro Kuleba are due to meet in Turkey later in the day, though Kyiv has said its expectations for the talks are low.
07:48 AM
Rio Tinto cuts ties with Russia
Rio Tinto has become the first big mining company to cut ties with Russia following its invasion of Ukraine.
The Anglo-Australian company, which previously said it had no assets or employees in Russia or Ukraine, said it was terminating all commercial relationships with Russian businesses.
Rio Tinto runs the Queensland Alumina joint venture with Rusal, which holds a 20pc stake. It’s not yet clear how the move will affect this partnership, but the firm said last week it had the “appropriate structures” in place to ensure operations would not be disrupted.
Any decision to curb production at the site could add to the crunch in the aluminium market, where prices are already at historic highs.
Rio is the latest in a string of companies to cut ties with Moscow. US giants McDonald’s, PepsiCo, Coca-Cola and Starbucks all said they were halted business in the country this week.
07:39 AM
Russia threatens to hold planes hostage
Good morning.
Russia may ban its airlines from returning leased aircraft to their owners in stubborn defiance against western sanctions.
European leasing companies are facing a huge challenge to try and recover hundreds of jets after new measures against Vladimir Putin blocked them from doing business in the country.
But the Kremlin has published draft laws that would prevent carriers from returning the planes. It would also force them to pay leases in roubles for the rest of the year.
Russia’s aviation industry has been brought to its knees by the sanctions, which also include wide-ranging airspace bans and exclusion from London’s insurance market.
5 things to start your day
1) Fracking back on the table as Putin shakes foundations of UK energy policy Soaring gas prices prompt rethink among ministers keen to secure Britain’s domestic supplies
2) Russian banks offer yuan accounts as Putin turns to China Plunging rouble and western sanctions prompt Russia to use Chinese currency
3) MoD signs off contracts worth billions on basis of just one bid £7.2bn worth of contracts were signed without a competitive process at all
4) Germany ‘fights efforts to block Sberbank’ Berlin faces accusations of pushing back on plans to block Russia from Swift international payments system
5) IMF approves $1.4bn in ‘critical’ support for Ukraine Global lender warns of “already very serious” consequences of war as 2m refugees flee country
What happened overnight
Asian equities rallied on Thursday following a strong bounce on Wall Street and a breathtaking surge in Europe. Tokyo jumped up 3.8pc, while Hong Kong, Seoul and Taipei climbed more than 2pc each. Shanghai, Sydney, Singapore, Manila and Wellington were also sharply up.
Coming up today
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Corporate: Capita, Balfour Beatty, Hill & Smith Holdings, Just Group, National Express, Savills, Spirax-Sarco Engineering, Spirent Communications, Volution Group (full-year results); DS Smith (interims)
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Economics: ECB interest rate decision (EU), consumer price index (EU), initial jobless claims (US), monthly budget statement (US), RICS house price balance (UK)
